The International Monetary Fund on Wednesday signed off on a three-year, $69.7 million loan programme for Haiti to help the island country boost its economic growth and make it less vulnerable to shocks.
Haiti has been one of the most consistent IMF borrowers as the island has struggled to deal with hurricanes, high food prices, and an earthquake that devastated its economy in 2010. Its last IMF programme, totalling $60 million, ended in December.
Market vendor in Port-au-Prince Carline Pierre said that doing business in Haiti has been tough.
“The living conditions are very hard for the poor. We are sitting here and people don’t really come to buy products like they used to. Things are difficult.”
The approval allows the immediate disbursement of about $10 million for Haiti. The release of subsequent aid tranches will require Haiti to show it is complying with the conditions of the loan, which include cutting its fiscal deficit to 3.25 percent of its GDP this fiscal year from 7.5 percent the prior year.
Wayne Camard is the resident representative for the IMF in Haiti. He told Reuters that the international organisation was eyeing reform in resource-draining sectors of public funds like Haiti’s electricity sector.
“Another branch of reforms are reforms that will help economic growth and things like reforming the electricity sector which has been a perennial problem both in terms of making large financial losses that the government has to cover, reducing the amount of money they have to spend on poverty programmes and in terms of the provision of services, of electricity to the population.”
Haiti, the poorest and most unequal country in the western hemisphere, is still recovering from an earthquake five years ago that levelled much of the capital, Port-au-Prince,” said Camard.
In 2010, the IMF offered $60 million in aid to Haiti and forgave its $268 million debt to help its humanitarian efforts following the disastrous 7.0 that rocked the Caribbean nation.
But five years on more than 6 million Haitians, almost 60 percent of the population, live on two dollars a day, according to a recent World Bank report.
Camard said Haiti must base policy on more than providing earthquake aid.
“What we’re doing now is going beyond the immediate post-earthquake environment. In the post-earthquake programme the country made a lot of progress both in terms of immediate rebuilding but also in terms of maintaining a stable economic environment and putting in place some important reforms,” he added.
But the impoverished country is grappling with external financial pressure.
Haiti has been one of the country’s worst affected by falling oil bills under Venezuela’s Petrocaribe programme. The Venezuelan scheme stipulates Caribbean and Latin American country members pay cash for part of every shipment, and lets them finance the rest at low interest rates, or make in-kind payments with products ranging from rice to blue jeans.
But cutbacks on oil shipments to Haiti from Venezuela has seen Port-au-Prince revise its budget.
“Rather on the contrary it has been a big challenge for this year’s budget. That the amount of financing through the Petrocaribe scheme has gone down and so the government has had to put in place a revised budget and cut quite a few expenditures that they had hoped to finance with the funds from Venezuela,” said Camard.
Compounding Haiti’s economic woes are political tensions. Since January, Haiti has been without a functioning parliament which has left President Michel Martelly ruling by decree.